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Natural gas prices outlook for September 2011

September 5, 2011

The natural gas market changed directions during August, but eventually, as expected, the natural gas was traded down. By the end of August the Henry Hub fell sharply below its initial starting price from the beginning of August. What is up ahead for US natural gas prices in September? Let’s examine the changes in the natural gas prices during August 2011 and provide an outlook for natural gas prices for September 2011:

Natural gas prices August 2011- analysis

Let’s first examine how natural gas prices (Henry Hub) shifted during August: the Henry Hub natural gas spot and future prices started off with very sharp falls in the first few days of the month; this sharp drop coincided with the sharp decrease in crude oil prices during the first week of August. The energy commodities prices’ fell during that week mainly due to the sharp fall in the US stock markets over the concerns of the US economy. These concerns were mostly related to the S&P downgrade of US’s credit rating.

During the rest of the month, the Henry Hub natural gas spot and future prices (short term September delivery)fluctuated with sharp turns along the way as seen in the chart below. By the end of the month, the Henry Hub spot price fell by 6.1% and the future price decreased by 2.29%.

Let’s divide August into three parts as seen in the chart below: from 29/7 to 8/8, from 8/8 to 22/8 and from 22/8 to 31/8; during the first part of August the Henry Hubspot and future prices sharply fell; during the second part of the month, the Henry Hubspot and future prices slightly fell by -0.75% and 1.17%, respectively; during the last part of August, the Henry Hub spot price didn’t change much and slightly rose by 0.76%, while the future price rose by 1.14%. The table below summarizes these findings: